Marijuana Stocks In 2021
Are you watching top marijuana stocks looking for the right one to invest in? Currently, the best cannabis stocks to invest in have seen some upward momentum after a few months of declining in value in the market. To close out April it seems the cannabis sector is attempting to reclaim some of its market value and push higher.
But with top cannabis stocks trading at some of their lowest price points of 2021 it could be a good buying opportunity for new investors. For new traders, there are a few things about marijuana stocks to know before starting a position. For one most top marijuana stocks are known for having significant market volatility. Because of this many investors prefer to make short-term positions in the sector using day trading and swing trading methods.
With that said many analysts are predicting substantial long-term gains for the cannabis industry. But finding pot stocks with less volatility for long-term holds can sometimes be difficult. One area that has shown more stability is ancillary marijuana stocks. Ancillary marijuana companies are companies that support the cannabis industry but do not actually handle the cannabis plant. Specifically, the stocks that have the most momentum since mid-2020, are gardening centers and hydroponic supply companies.
Investing Long Term In Cannabis Stocks
One example of a cannabis stock in this area that saw over 880% gains in 2020 is GrowGeneration Corp. (NASDAQ: GRWG). In general, the company continues expanding across the U.S. and expects to have over 100 stores nationwide by 2023. In essence, this is a good way to gain exposure to the cannabis market with a company that could potentially continue growing with the industry.
At the present time, most of these ancillary cannabis stocks have shown more stability than your vertically integrated marijuana stocks. In some cases, these stocks also provide a dividend as an incentive for the long-term investor. With the intention of researching these top marijuana stocks for your May watchlist, we can look into some companies. As the market continues to show upward momentum these marijuana stocks could have both long-term and short-term potential for investors. With this in mind let’s take a look at 2 top marijuana stocks to add to your watchlist for May.
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Marijuana Stocks To Watch:
- The Scotts Miracle-Gro Company (NYSE: SMG)
- Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM)
The Scotts Miracle-Gro Company
The Scotts Miracle-Gro Company is a global marketer of branded consumer lawn and gardening products with a worldwide presence. Primarily, the company is in the cannabis market through its wholly-owned subsidiary Hawthorne Gardening. Currently, Hawthorne is a leading hydroponic and indoor growing products supplier for the cannabis industry. Scotts is showing a strong performance from Hawthorne Gardening in Q1 fiscal 2021 financials U.S. consumer sales increased 147%. Additionally, Hawthorne’s net sales increased 71% from 2019 to $309.4 million. Specifically, Hawthorne’s segment shows their profits rose 223% year over year to $40.4 million.
On April 26th Scotts announced a quarterly cash dividend payment of $0.62 per share. The dividend is payable on Thursday, June 2021 to shareholders holding as of Thursday, May 27th. At the present time, Scotts has $4.1 billion in sales and recently adjusted its 2021 outlook higher. Now the Hawthorne segment is predicted to see a sales growth of 20-30% with companywide sales growth of 8-12%.
SMG stock is up 18.55% year to date with a high of $254.34 earlier in April. Closing on April 26th at $236.08 the stock is down 2.21% in the past 30 days. According to analysts at Tip Ranks SMG stock has a 12-month average price target of $285 per share. This would be a 20.72% gain from current levels. Generally speaking, Scotts provides investors to both the agriculture segment and specifically the cannabis market.
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Hydrofarm Holdings Group, Inc.
Hydrofarm Holdings Group, Inc. is a top distributor and manufacturer of hydroponics equipment and supplies for controlled environment agriculture. For some history, the company has been in business for 40 years in the private sector. During the end of 2020 Hydrofarms became a publicly-traded company with an IPO that saw substantial gains from its opening. In the cannabis market, Hydrofarms sells high-intensity grow lights, climate control solutions, and has a large portfolio of branded products.
Hydrofarm produced Q4 and full-year 2020 results with net sales up 62.6% to $87.4 million. Additionally, the company saw gross profit increase 190.5% to $16 million or 18.3% of net sales. On April 26th Hydrofarm announced preliminary first quarter 2021 results. At the present time, the company estimates net sales for Q1 will be about $109 to $111 million. This is a 65% increase from the $66.9 from Q1 2020. Additionally, Hydro farm also announced it has entered into an agreement to acquire the nutrient maker of Heavy 16 Field 16 LLC. This move will further enhance Hydrofarms portfolio in the category of premium plant nutrients.
HYFM stock is up 17.84% year to date with a high of $95.48 in February. Trading on April 27th at $55.80 the stock is down 9.94% in the first 5 minutes of trading. According to analysts at Market Beat HYFM stock has a consensus price target of $75.00 per share. In essence, this would be an upside of 34.4% from current levels. For this reason, HYFM stock is a top marijuana stock to consider for long-term cannabis investing.
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